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Bausch's (BHC) Q4 Earnings Match Estimates, Revenues Miss

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Bausch Health Companies Inc. (BHC - Free Report) reported mixed results for the fourth quarter of 2019, wherein earnings were in line with estimates while revenues fell marginally short of the same. 

Consequently, the stock declined 5.7% following the release.

Bausch’s stock has gained 10.1% in the past year compared with the industry’s growth of 2.8%.

The company’s adjusted earnings per share of $1.15 were in line with the Zacks Consensus Estimate and increased from $1.05 reported in the year-ago quarter.

Total revenues of $2.2 billion missed the Zacks Consensus Estimate by 0.02% but increased 5% year over year.

Quarter in Detail

Revenues in the Bausch + Lomb/International segment (comprised 55.7% of the total revenues) were $1.2 billion, up 3% year over year. Excluding the impact of discontinuations and divestitures, the segment organically improved approximately 3%, driven by growth in the Global Consumer, Global Surgical and Global Vision Care business units.

The Salix segment revenues rose 21% year over year to $517 million, primarily driven by 29% growth in Xifaxan. Relistor and Plenvu also contributed significantly.

The Ortho Dermatologics segment revenues were $158 million, down 1% year over year due to lower volumes resulting from the loss of exclusivity of Elidel, Zovirax and Solodyn. This was partially offset by growth in the Global Solta business. The FDA approved the New Drug Application for its acne lotion, Arazlo (tazarotene).

Diversified Products segment revenues were $311 million, down 6% from the year-ago quarter, primarily due to the loss of exclusivity of certain products.

2019 Results

Earnings per share came in at $4.42 in 2019 as compared to $4.03 in 2018. Revenues came in at $8.6 billion in 2019, up 3% from 2018.  The company reduced debt by approximately $900 million in 2019.

2020 Guidance

The Zacks Consensus Estimate for 2020 revenues of $8.85 billion is in line with the upper end of the company’s guidance of $8.65-$8.85 billion.

Our Take

While fourth-quarter revenues fell marginally short of expectations, the Bausch + Lomb/International and Salix segments performed well in 2019. Xifaxan, BioTrue ONEday and Bausch + Lomb ULTRA continue to drive growth. Newer products, such as Lumify and Thermage FLX, also performed well. The initial uptake of psoriasis lotion, Duobrii, has been encouraging as well, while Trulance continues to penetrate the market.

Bausch has narrowed its focus on seven products — Vyzulta, Siliq, Bryhali, Lumify, Duobrii, Relistor and SiHy Daily. These products are performing well and the momentum is expected to continue in the upcoming quarters.  

Zacks Rank & Stocks to Consider

Bausch currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the healthcare sector are Pacira Pharmaceuticals PCRX, United Therapeutics Corporation UTHR and Xencor, Inc. XNCR. All three stocks carry a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Pacria’s earnings per share estimates have increased to $2.21 from $2.11 for 2020 in the past 60 days.

United’s earnings per share estimates have increased to $10.64 from $10.23 for 2020 in the past 60 days.

Xencor’s loss per share estimates have narrowed to $1.65 from $1.67 in the past 60 days.

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